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Where is Delaware Now? Medicaid Population in Delaware –May 2010 179,963 Delawareans enrolled in Medicaid –September 2010 185,000 Delawareans enrolled in Medicaid 6,100 children enrolled in the Delaware Healthy Children Program (CHIP) –December 2010 194,249 Medicaid recipients enrolled in Medicaid, Delaware's health insurance program for the poor, disabled and aging. State Costs Majority of Medicaid costs are paid by federal government – and that percentage is increasing; however, the program is expected to cost Delaware taxpayers more than $534.4 million this year, consuming 16 percent of the State’s $3.3 billion operating budget.

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Uninsured in Delaware Delaware’s Uninsured Population Over the past few years uninsured in Delaware has risen from 9.9% to 11.2% Approximately 101,000 are without insurance at any given time- (this is a 2008 estimate) Approximately 28% - or 28,000 - uninsured Delawareans are eligible for public benefit through Medicaid (21,000 or CHIP 7,000) Another 20% are eligible for Community Health Access Program CHAP - Incomes below 200% of FPL ($44,000 for family of 4).

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Who Are the Uninsured 23% - under the age of 19 54% - male 69% - white 59% - own or are buying their home 21%- live alone 80% - are above the poverty line 34%- with household income over $50,000 59% - are working adults 9% - are self-employed 21% - are non citizens

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Uncompensated Care – Who Pays Cost Shift – providers attempt to recover unpaid or underpaid costs of care delivered to one patient by increasing costs and passing it on to another patient population 1999 – 28% cost shift in DE Hospitals due to uncompensated care to the uninsured. For every $100 of hospital costs, the total commercial insurance market paid an extra $28.

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Expanding Coverage Coverage for Dependents (IRS Definition) (6 months – September 23, 2010): –Must provide coverage to a beneficiary’s dependent child until the child turns 26 –Child does not have to live at home Temporary High Risk Pool (90 days - July 2010 - to 2014) –Citizens with pre-existing conditions who were uninsured 6 months prior to applying for coverage in the pool –$5 billion provided –Pool operated by HHS or states –Delaware participates in HHS Pool – Premiums Health Benefits Advisory Committee led by Surgeon General will recommend essential benefits package 11

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Expand Coverage Expands Medicaid eligibility to 133 % of Federal Poverty Level (2014) Approximately $14,600/ individual; $29,400/family of 4 Includes childless adults Provides national base of seamless coverage Federal Share (FMAP): 100% for newly eligible first 3 years (2014 – 2016) Phases down to 90% for 2020 and subsequent years Provides full funding for CHIP through 2015 and continues authority through 2019. Children on CHIP would be transitioned to Medicaid or into Exchange. 12

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Delaware Focus Medicaid Expansion to Newly Eligible States are required to extend Medicaid eligibility to everyone younger then 65 with incomes up to 133% of FPL($29,327 family of 4). 2014 – 2016 - Federal government pays 100% 2017 – Delaware will pick up 5% of cost 2020 - Federal government pays 90% of cost Increase FMAP for Delaware’s Already Expanded Population Delaware currently provides expanded coverage to 27,000 Delawareans up to 100% FPL Currently - Federal government pays 53% of the cost (after ARRA funds expire) 2014 – the federal match will increase to 75% and by 2020 will cover up to 90% of cost

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Employer Sponsored Plans & Increasing Choice for Small Business Sixty-one percent of working age individuals and their families receive employer-sponsored insurance coverage, and this coverage is increasingly in jeopardy. The primary source of instability in the employer-sponsored insurance market is the decrease in employers offering health insurance coverage to workers and their families. –Between 2000 and 2008, the percentage of firms offering health insurance coverage to their employees declined from 69 to 63. –For firms employing fewer than 10 workers, the decline was even greater – from 57 to 49 percent. –Coverage outside the employer-sponsored market is unaffordable or does not provide adequate coverage for most Americans. –Only five percent of non-elderly Americans receive coverage on the individual market, where coverage is more expensive and limited than in employer-sponsored plans.

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Small Business Issues Health Care and Small Business Health care costs are a huge cost driver for businesses. Small business owners, in particular, have a hard time negotiating and paying for healthcare coverage for their workforce. Over the past decade, average annual family premiums for workers at small firms increased by 123 percent, from $5,700 in 1999 to $12,700 in 2009, while the percentage of small firms offering coverage fell from 65 to 59 percent. National studies indicate that small businesses on average pay 18% more for their healthcare coverage compared to larger businesses. ACA addresses these issues through small business tax credits and an improved insurance marketplace for small business.

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Tax Credits for Small Business Under ACA, small employers with fewer than 25 full-time equivalent employees and average annual wages of less than $50,000 that purchase health insurance for employees are eligible for a tax credit. For 2010 through 2013, that small business tax credit is up to 35 percent of their contribution toward the employee’s health insurance premium. Starting in 2014, small businesses will have access to state-based Small Business Health Options Program (SHOP) Exchanges, which will expand their purchasing power, reduce costs and increase competitive pressure on insurers, with the goal of driving down premiums for small businesses. For 2014 and beyond, small employers who purchase coverage through the new Health Insurance Exchanges can receive a tax credit for two years of up to 50 percent of their contribution. Tax exempt organizations eligible for similar credits.

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Expanding Coverage: Small Business Tax Credits (2010) Eligibility: Employers with fewer than 25 full time employees (or a firm with fewer than 50 half time workers) who –pay average annual wages of less than $50,000 –who provide health insurance to their employees Value –Worth up to 35% of employer’s premium costs in 2010. –January 1, 2014 worth up to 50% Non-Profits –eligible for payroll tax deduction if they fit above criteria –worth up to 25% of employer’s premium costs –2014 – 35% credit 18

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Market Reforms & Employers Small Business Health Options Program Exchange – Non-profits eligible (2014) Small group plans must accept every employer and individual who applies (2014) Small Employer/Non-Profit: 100 employees or state can define as 50 or less (2014) Large Employers: Can participate in Exchange, at each state's discretion (2017)

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Employer Responsibility (2014) In 2014, the Affordable Care Act requires large employers to pay a shared responsibility fee only if they do not provide affordable coverage Employers with 50 or more full time employees (FTEs) who do NOT offer coverage must pay penalty: –for every full-time employee that receives a premium credit for the Exchange FTE= 30 or more hours per week Part-time employees: Less than 30 hours per week 20

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Pressing Timeline Health Benefit Exchanges (2014) Creates state-based “Health Benefit Exchanges”, or marketplace to increase choice, provide competition, transparency on services and cost Private insurance plans that meet minimum standards on benefits and cost-sharing set forth in regulations Multi-state Exchanges run by HHS for states that choose not to operate their own Exchange 21

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Increases Quality, Affordable Options Health Benefits Exchange These Exchanges would include web portals that provide standardized, easy-to- understand information that make comparing and purchasing health care coverage easier for small business employees, and reduce the administrative hassle that small businesses currently face in offering plans. Starting in 2017, the Affordable Care Act also provides states flexibility to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange. If businesses don’t offer coverage, workers at small firms and their families would be eligible for their own tax credits to purchase coverage through the Exchange. The Affordable Care Act streamlines health plans to keep premiums lower by instituting a premium rate review process and setting standards for how much insurance companies can spend on administrative costs, also known as the medical loss ratio.

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Health Insurance Exchanges Insurance Marketplace - Health Insurance Exchange The Affordable Care Act provides Delaware with resources to plan for the best implementation for Delawareans of a competitive, private health insurance marketplace for consumers that provides lower costs, one-stop insurance shopping, and greater benefits and protections. State Flexibility around Health Exchanges States have substantial flexibility to dictate the design and operation of new competitive marketplaces – Health Insurance Exchanges – that will provide affordable private insurance to individuals and businesses beginning in 2014. Under the Act we can work to implement provisions of the Act in a manner that can be very helpful to small businesses in our state, so that they can provide affordable healthcare coverage to their employees. Delaware’s DHSS was awarded a $1 million planning grant to engage key stakeholders across the state in a planning process to determine the best implementation of an Exchange in Delaware. Stakeholder outreach process – to consumers, small business, agent/broker community and others - is already beginning, in collaboration with the Delaware Health Care Commission. Additional federal funds will be available for implementation.

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Defining Exchange’s Essential Benefits HHS Secretary must ensure that scope of benefits are equal to scope of benefits provided by typical employer sponsored plan Establish that benefits are not denied based on: –Individual’s “present or predicted disability, degree of medical dependency, quality of life, age or expected length of life” Department of Labor to conduct survey of employer sponsored plans, provide report to inform HHS Secretary’s determination Will be a chance for public comment 26

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Security and Stability that Promotes Entrepreneurship In 2014, the Affordable Care Act ends the discriminatory insurance industry practices of jacking up premiums by up to 200 percent because an employee got sick or older. It will also reduce “job lock” – the fear of switching jobs or starting a small business due to concerns over losing health coverage – by guaranteeing access to coverage for all Americans. This will encourage more people to launch their own small businesses, or join existing small employers. Reviews the Impact of Reform on Small Businesses –The Affordable Care Act requires the Government Accountability Office (GAO) to specifically review the impact of Exchanges on increasing access to affordable health care for small businesses to ensure that Exchanges are indeed making a difference for small business owners.

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Individual Responsibility (2014) Those who are uninsured add over one thousand dollars to the average premium of families with insurance. Everyone will be asked to share responsibility for lowering costs and covering more people Tax penalties for no coverage - IRS: 2014: $95 2015: $325 2016: $695 OR Percent of household income: 1% in 2014, 2% in 2015, 2.5% - 2016 and after Exempts individuals with incomes too low to pay taxes ($9,350) or if premiums exceed 8% of income 31

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State Preparation and Planning Challenge for Delaware: Maximize benefits for Delaware citizens and businesses to support the goals of: –widespread access to affordable health insurance and health care –improving quality and reducing costs –supporting people in community-based settings –promoting healthy lifestyles and prevention –supporting economic development and job growth.

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Responsibilities Overseeing planning, development and implementation Identifying ways to build on existing infrastructures and programs, or to create a new entity within state government to house governance and oversight Ensuring appropriate coordination and collaboration across state agencies Engaging with relevant stakeholders to get insights and collaboration on reform implementation –PPACA in general – broader issues –Health Benefit Exchange

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Health Promotion and Prevention Prevention and Public Health Fund –Administered by HHS Secretary –Expand investment in public health program –Support programs authorized by Public Health Service Act Including prevention research, health screenings and education and awareness Graduated increases in annual funding availability from FY10 $500 million to FY2015 and beyond $2 Billion Position Delaware to be an incubator for innovation in this arena

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Medicaid and Medicare Wellness Annual wellness visits and personalized prevention plans for Medicare beneficiaries (Jan. 2011) No co-pays or deductibles for preventive services for Medicare patients (2011) 1% FMAP increase for States if Medicaid program covers clinical preventive services recommended by the Preventive Services Task Force (2013) Grants to provide incentives to Medicaid beneficiaries who successfully participate in a wellness program and healthy lifestyle program Must demonstrate changes in health risk and outcomes

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Workforce Initiatives Funding to encourage students pursue full time nursing careers Establishes new nurse practitioner led clinics Encourages states to plan for and address health professional workforce needs Expanding tax benefits to health professionals working in underserved areas

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Important Websites to Watch www.HealthCare.gov www.dhcc.delaware.gov Contacts for more information and participation opportunities Rita.Landgraf@state.de.usRita.Landgraf@state.de.us and Bettina.Riveros@state.de.us